CHP is a Good Thing, So Why Don’t Utilities Use It More?

When a power plant generates power, it also generates massive amounts of heat – a valuable resource that is typically rejected as waste and dumped into rivers or lakes or vented into the air, says Anna Chittum, senior policy analyst with the American Council for an Energy Efficient Economy (ACEEE), on the organization’s blog.

Instead of wasting that heat, combined heat and power (CHP) systems use it, simultaneously generating electric and thermal energy. The combined thermal and electric efficiency of CHP usually exceeds 70 percent, whereas the separate generation of electricity in the US centralized grid system averages about 34 percent, according to a report from ACEEE.

In the United States, it is clear that CHP’s system-wide benefits are not well understood, says the report. CHP is not the dominant form of electric generation in the country. The existing 82 GW of CHP provides about 12 percent of US annual electricity production. An estimated 130 GW of CHP potential can be found today in existing facilities, but CHP represents only 8 percent of installed electric generating capacity.

Since CHP systems are located near the point of consumption, they increase the reliability of the electricity system while reducing the amount of energy lost piping it to distant customers. CHP offers these benefits to an associated utility system, says ACEEE:

But the report says the business models of utilities are actually a disincentive for CHP. If utilities could better understand and value the benefits of CHP to their systems as a whole, they could stimulate tremendous growth in the technology, offering their customers lower cost energy and improved system resiliency, all while reducing harmful emissions.